Myth: Vendor Overcharges To Government (Part 2)

Posted on April 7, 2013. Filed under: Journalism | Tags: , , , , , , , , , , , , |

6th in the series The Manipulators

Your words for the day:

  • auditor = one who analyzes processes and figures, frequently on a short-term recurring cycle
  • extortion = coercion, pressure, blackmail, squeezing, shakedown
  • cheat = deceive, swindle, bilk, take advantage of

The target of my mockery:  The Houston Chronicle (again), December 9, 2012, Section A, Pages 1 and 14, Article title:  Auditors find 4 years’ worth of overcharges, Writer:  Mike Morris (hereinafter referred to as Jack-Hass).

Every business (or government entity) creates a Purchase Order when it agrees to buy product from a vendor.  That order constitutes a contract with an offer (to sell), an acceptance (of the product and the terms of sale) and transfer of the consideration (the monetary payment).  This contract can be verbal, but big business prefers the accountability of that paper trail; it gonna be in writing.

The City Auditor in our story alludes to a contract that “was part of US Communities, a government purchasing cooperative.  The contract ran from March 2006 to the end of 2010.”  That would be 252 weeks by my calculation.  And that is all that Jack the Writer thinks we should know about this third cook in the accounting kitchen.  What is US Communities?  I’ll get to them in Part 3.

I’ve spent a bunch of years preparing specifications lists for needed products and contacting various vendors for availability and best pricing of our needs.  I have prepared purchase orders, detailing the final agreement of purchase (product description, unit price, total price)).  I have cross-checked the product received against the vendor’s shipping bill and my company’s Purchase Order for compliance with specs, and prepared a receiving ticket to document the delivery.  This receiving ticket was then affixed to the purchase order.  ANY DISCREPANCIES, whether of quality or quantity, WERE ADDRESSED WITH THE VENDOR AND CORRECTED BY THE VENDOR, or I ISSUED A CHANGE ORDER TO THE PURCHASE ORDER TO ACCOMMODATE THE DOCUMENTED VARIANCE.

When the vendor’s invoice came in, I went to the purchase order and the attached documentation and compared it to that invoice.  If it matched all of my documentation, I approved that invoice for payment.

If the invoice differed, it was kicked back to the vendor for clarification and compliance.

That invoice was not paid until it complied with my company’s documentation.  It is basically the same thing that everyone does in the department store:  select a suitably priced product, take it to the check-out, then scream bloody murder if the register ka-chings a higher price than that shelf price tag that attracted your attention.  You ain’t payin’ until the cashier re-rings at your understood price, or until you change your expectation and agree to the now-higher price.  You take care of the variance at the point of sale.

So, WHY does a multi-billion dollar a year operation (e.g., guv’ment) with whole departments on the payroll to oversee such things, pay those invoices as they are received and wait 5 years to see if it is overpaying for its weekly/monthly purchases?  Oh!  I really haven’t told you the particular newspaper story, have I?  Strap on that seat belt; this is going to be quite a ride.

Our writer, Jack-Hass, has a ripping good story — another one of those big business-ripping-off-the-taxpayer scoops.  This was going to be a no-brainer for this Hass, and the chosen headlines accentuated that:  Office Depot could owe city millionsAuditors find 4 years’ worth of overcharges, and, Controller says firm didn’t cooperate with audit.  We gullibles, by and large, just see the hot-button headlines and conclude that “our local paper has uncovered another anti-taxpayer plot.”  Rah!  Rah!  Sis-boom-bah!  Obviously, that’s not what I read.

Our city auditor (City of Houston), hearing that other government entities (Dallas County, Texas; Los Angeles, California; State of Florida) were successful in cheating * Office Depot out of millions in alleged overcharges, checked the sign on his office door and discovered that he, himself, David Schroeder, was in fact being hyped as a bona fide AUDITOR.  “Wow!” he must have thought.  “Why don’t I…   AUDIT…  and make it look like my employer, the City of Houston, has been getting overcharged, too?  I’ll bet everybody will sit up and realize that I am a…  I am a… ”  (he read the cue card on his office door again)   “… an AUDITOR!”

You will have to excuse Dangerous Dave’s uncertainty.  Auditors, as a rule, cruise around their kingdoms at least once a year to rap the knuckles of those departmental bean counters.  This would be Dave’s first venture in the AUDITING of this contract, so he was probably both mystified and elated when he discovered that Office Depot’s contract had been on-going and un-reviewed FOR OVER 4 YEARS.  “What was the auditor doing,”  he must have thought.  (I figure this is the FIRST audit since, had it happened before, this story would be 1, 2, 3, or 4 years AGO.)

Now, one would think, being the auditor for the CITY and all, that his job would be to audit CITY DEPARTMENTS for accountability and adherence to city departmental protocols.  You know, “Show me what you did with all that money the city budgeted to you this year just ending!  Paperwork.  Show me the paperwork!”

Anyway, one would think that.  Yet, the clue to bureaucratic goldbricking was in the headline “Auditors find 4 years’ worth of overcharges.”  Get real.  NO ONE in accounting noticed ANYTHING for 4 years??  NO ONE in the auditors office, during that 4 years, thought to go over and ask someone in accounting, “WHAT’S UP DUDE??”  (Or, Dudette.  I don’t want to be labeled a sexist.)

Let’s give Dangerous Dave his due.  He at least STARTED OUT mucking around in the files of the city’s accounting department.  We use the term “files” somewhat loosely, here, ’cause Dave couldn’t find the documented history of just under 300,000 transactions from Office Depot.  He did find a total for the amount paid out by the accounting department over 4 years and 10 months for those transactions — $19,200,000.  YES, an undocumentated payout of TAXPAYER MONEY by city employees to the tune of $19.2 million.  But, Dangerous Dave, the Cinderella Auditor, rose to the occasion in true bureaucrat mode — and in keeping with his original intent for leaving the comfort of his office in the first place — announced that…

…it was all Office Depot’s fault.


*being government entities and all, they did the cheating legally.   Using the extortive weight of GOVERNMENT, they leaned on the private business and said, “Give us a BIG REBATE or we’ll have to play rough with you.”  The Big Pee ignored the extortion by officialdom, and went for vendors ripping off the tax payers.

**A national office supply retailer.


Next upMyth, Part 3Can you spell t-o-t-a-l-l-y  a-b-s-u-r-d?

Read Full Post | Make a Comment ( None so far )

Liked it here?
Why not try sites on the blogroll...